July 2006

Missouri small businesses get
better health insurance access

Small businesses in Missouri with as few as two employees will be eligible to buy group health insurance from consortiums. Governor Matt Blunt has signed legislation aimed at increasing access to affordable health insurance for employees of small businesses.

According to an Associated Press report, the bill expands eligibility for association health plans by decreasing the mandatory number of members of associations from 100 to 50.

Association or consortium health plans were already available for small businesses under existing law, but this bill allows the establishment of protective covenants. Instead of bidding for health insurance as 50 individual businesses, the covenants allow a particular association to submit one bid for the whole group, which is then treated as one large company.

There is no cap on the number of employees a company can have to join a consortium. Small businesses with two employees could form associations with companies that employ 200 people. The larger the number of employees in a consortium, the more evenly risk is distributed.

The legislation is modeled after a pilot project that involved the Southwest Area Manufacturers Association’s health care consortium. The consortium, with 32 member companies, represents 1,300 employees and covers 2,000 people. The companies were required to sign up for at least 30 months of coverage. Six companies were unable to afford group health care coverage for their employees before joining the consortium, the governor’s office said. Initial premium savings ranged from 18 percent for large employers to up to 50 percent for small employers.

Businesses cannot form a new organization strictly to get lower-cost health coverage, said Brent Butler, the Missouri Insurance Coalition’s government affairs director. Most already belong to industry associations, such as a chamber of commerce.

“This gives one more option to small business owners when they go out to shop for health insurance benefits for themselves and for their employees,” said Kelly Peerson, grass-roots coordinator for the National Federation for Independent Business, which lobbied for the legislation. “If you own a business and you would like to have health insurance for your employees, you’re limited in what you can shop for.”

Source: Bellevillenewsdemocrat.com, www.belleville.com

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